NSW: Q&A When the Committee isn’t Acting Appropriately

This article is about how to handle a strata committee member either bullying or not acting appropriately in NSW. Can you remove committee members from the committee? If so, how?

Table of Contents:

• QUESTION: We’re engaging a solicitor to deal with our dysfunctional committee. Can we claim the legal costs from our strata insurance? How will that impact our insurance premium?
• QUESTION: Why has the legislation made it made it easy to remove a committee member? Who does this help?
• QUESTION: As representatives of the owners corporation, are committee members required to provide contact details to owners?
• QUESTION: If our owners corporation continuously adopts capital works levies well below figures in our ten year plan, are there fines or penalties that could be imposed?
• QUESTION: In our four lot building, two lots are owned by a couple and nothing ever gets done. Is this how a strata building should be run?
• QUESTION: What can we do if the Strata Committee does not reply to us when I write to them about an issue.
• QUESTION: Our strata executive committee has been taken over by a group of lot owners who make decisions in their favour and no longer enforce bylaws. They don’t communicate with the rest of the committee. What do we do?
• QUESTION: Our Secretary was subject to a Motion of a By-Law breach and worked with the Strata Manager to re-order Motions, placing his own Motion (where he was accused of a By-Law breach) at the very end of the agenda.
• QUESTION: What can we do about one of our strata executive committee members who disregard the law and people’s safety, and has now driven almost all owners away?
• QUESTION: An old cooling tower in our building only services a proportion of the apartments. What are the strata executive committee powers? The committee is proposing to replace the tower with ducted air conditioning to the affected units at the cost of the Owners Corporation.
• QUESTION: What are my rights as a committee member who is abused in emails constantly with offending words and disrespectful terms about quotes and repairs for the block from another committee member?

Question: We’re engaging a solicitor to deal with our dysfunctional committee. Can we claim the legal costs from our strata insurance? How will that impact our insurance premium?

Answer: The owners corporation or committee might be eligible to claim under the strata insurance policy for legal costs incurred in defending against legal actions.

When engaging a solicitor to address issues with a dysfunctional committee, it’s important to understand how this action interacts with strata insurance policies, particularly regarding the coverage of legal costs and the potential impact on insurance premiums.

• Legal costs for lot owners: Generally, the legal expenses incurred by a lot owner in pursuing action against the owners corporation or its committee are not covered under a standard strata insurance policy. As a lot owner, you would typically be responsible for bearing the cost of legal representation and any related expenses.
• Coverage for the owners corporation or committee: Conversely, the body corporate or committee might be eligible to claim under the strata insurance policy for legal costs incurred in defending against legal actions. Such coverage is contingent upon the specifics of the insurance policy, which may include legal defence costs as part of its protection for the owners corporation’s officers and the committee.

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165

This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Shandit Pty Ltd T/as Strata Insurance Solutions strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisenent Australia AFSL No 240549, ABN 15 003 886 687.

This post appears in the April 2024 edition of The NSW Strata Magazine.

Question: Why has the legislation made it made it easy to remove a committee member? Who does this help?

Answer: It helps in schemes that are highly political.

It helps in schemes that are highly political. You could get a voting block of 26 people or 26 unit entitlements, and they’d block any special resolution. You get active strata committee members getting proxies and preventing themselves from being thrown off the committee. The new legislation makes it less of a restriction to be able to remove people. But it still has to be the majority of people do not want that committee member on the committee. We’re not getting rid of a majority rights, we just getting rid of special majority, if you like, or a special resolution. It would help remove lazy committee members or those who are not assisting the owners corporation.

Allison Benson
Kerin Benson Lawyers
E: allison@kerinbensonlawyers.com.au
P: 02 4032 7990

This post appears in Strata News #678.

Question: As representatives of the owners corporation, are committee members required to provide contact details to owners?

One of our committee members is a non-owner proxy nomination from a lot owner. They will not provide their email to owners. As committee members represent the owners corporation, are they required to provide contact details to owners?

As a lot owner, I’ve asked the strata manager several times for the email address. The strata manager has instructed me to py for a records search. It seems very unfair.

Answer: There is no express requirement for strata committee members or owners to provide an email address.

While frustrating, there is no express requirement for strata committee members or owners to provide an email address. Even on the strata roll for the address of services, it is optional.

Further, if you were to undertake a books and records inspection, there is no guarantee that email addresses would be recorded, as those members/owners may not have or supplied one.

Leanne Habib
Premium Strata
E: info@premiumstrata.com.au
P: 02 9281 6440

his post appears in the February 2024 edition of The NSW Strata Magazine.

Question: If our owners corporation continuously adopts capital works levies well below figures in our ten year plan, are there fines or penalties that could be imposed?

If our owners corporation continuously adopts capital works levies well below figures in our ten year plan, are there fines or penalties that could be imposed? Is there an obligation to comply with either the current Act or Regulations? Does this mean the legislation has no teeth?

Answer: There is effectively no real penalty (i.e. fines) for those owners corporations that fail to implement their 10 year capital works fund plan.

Section 80 of the Strata Schemes Management Act 2015 (NSW) (‘the Act’) requires an owners corporation to prepare a 10 year capital works fund plan for the purpose of anticipating and meeting major capital expenses required of ageing buildings.

The concept was introduced many years ago in response to the vast number of strata schemes that were resorting to raising special levies to reactively meet those expenses as they arose.

Owners were buying into properties where the previous owners had benefitted from the building’s components and facilities but had made no contributions towards replacement of those components and facilities.

So, the concept of a capital works fund and a 10 year capital works fund plan was born to create a proactive culture in strata schemes to build up funds during the life of the ageing process to quickly and effectively maintain the building – as is the fundamental obligation of a strata scheme. It is intended to prevent buildings from entering a state of disrepair at the behest of its owners.

However, section 80(7) of the Act only requires that “an owners corporation is, so far as practicable (and subject to any adjustment under this section), to implement each plan prepared under this section.”.

There effectively no real penalty (i.e. fines) for those owners corporations that fail to implement their 10 year capital works fund plan.

That being said, there are other “penalties” to those owners corporations that ignore their duty, such as:

1. The owners corporation’s asset (the building) losing value as it deteriorates.
2. Prospective buyers who choose not to invest into the strata scheme when seeing the “red flag” of an owners corporation failing to plan for the future, thus devaluing the price of lots.
3. A potential addition for those arguing that the owners corporation is dysfunctional, and seek to have it managed under compulsory appointment of a Strata Managing Agent (by order of the NSW Civil & Administrative Tribunal).
4. Liabilities for failing to repair and maintain common property in a timely manner (such as owners successfully suing the owners corporation’s for damages that arose out of neglect), which drives up the cost of running the owners corporation.
5. Being forced to raise special levies or take out strata improvement loans (and paying interest on those) to meet the major capital expenses when they arise.

In other words, there are real disadvantages for those who ignore their obligation to implement the plan. They are just less obvious to the uninitiated.

Tim Sara
Strata Choice
E: tsara@stratachoice.com.au
P: 1300 322 213

This post appears in Strata News #661.

Question: In our four lot building, two lots are owned by a couple and nothing ever gets done. Is this how a strata building should be run?

I have just bought one of four townhouses. The builder owns one and his wife own another, so they have two of the four votes in the strata.

I have a possum in my roof and their answer is “No, we are not fixing that”. The builder and his wife manage the building. There are no meetings and no minutes. Is this how a strata building should be run?

Answer: When votes in a small building are deadlocked, if you want this to change, you need to take up the case.

If the votes in your building are always deadlocked, as you say they are, then it’s going to be difficult, if not impossible, to get things done. If you want things to change, then you’re going to have to take up the case, whether that be communicating and negotiating with your fellow owners to have things done differently, or seeking quotes from an external manager to potentially provides services for your scheme, or seeking qualified advice on your rights.

Unless you take it upon yourself to do these things, it’s very likely things will stay as they are. And no, I don’t think that’s how a strata building should be run.

While I’m no expert on NSW Strata law, I can comment generally.

Chris Irons
Strata Solve
E: chris@stratasolve.com.au
P: 0419 805 898

This post appears in the December 2022 edition of The NSW Strata Magazine.

Question: What can we do if the Strata Committee does not reply to us when I write to them about an issue.

What can we do if the Strata Committee does not reply to us when I write to them about an issue. We have a water ingress problem causing safety and health issues and damage to our unit. We assume this is a Owners Corporation responsibility.

We wrote to the Strata Committee months ago. We have written an additional 4 times but have not received any response. What can we do?

Answer: There are a few ways one could address a non-responsive strata committee, depending on the circumstances.

There are a few ways one could address a non-responsive strata committee, depending on the circumstances.

However, the way one approaches this will depend on what is causing the water damage (for example, it may be a leaking hot water system that is not common property, or it could be a bathroom floor waterproof membrane that is common property).

1. Removing office bearers (such as the non-responsive secretary)

Under section 45 of the Strata Schemes Management Act (‘the Act’) an officer (secretary, chairperson or treasurer) can be removed by ordinary resolution of the owners corporation in a general meeting. A motion can be put forward to remove one or more officers. If attempting to remove them all, consider putting forward separate motions in case the owners want to keep one (or more) of the officers appointed but still want to specifically remove one. Bundling them all into one motion could cause it to fail.

2. Removing strata committee members

Similarly, under section 35 of the Act, one or more members of the strata committee can be removed by ordinary resolution at a general meeting. Again, consider whether to submit separate motions as opposed to bundling the removal of all committee members in one motion.

Under section 32(5), once the committee member is removed from their position, they are not eligible for appointment or election for a period of 12 months commencing on the day of the resolution having been passed.

Also, it would be prudent to submit another motion for the owners at the general meeting to elect another committee member (or more than one, if multiple positions are being made vacant) to avoid leaving a gap. If the owners don’t elect new committee member(s) and there is a vacancy, the remaining strata committee members could convene their own meeting to consider nominations and elect someone to fill the vacancy.

3. Making an application for mediation

An application should be made to NSW Fair Trading for mediation with the owners corporation to resolve the disputes. This is a precursor to seeking orders from the NSW Civil & Administrative Tribunal (in most cases, but not all – check out the “strata schemes fact sheet” on NCAT’s website for more information). The dispute in question is twofold:

• The lack of a response to your requests. It is only reasonable to expect to be communicated with, especially in these circumstances.
• Finding out whether the owners corporation has determined the cause of the water ingress, and if it relates to common property, what the owners corporation intends to do to rectify it (as well as any damage to your property, in accordance with section 106(5) of the Act).

4. Making an application for orders

An application can then be made to the NSW Civil & Administrative Tribunal for orders under one of the following (or more) sections of the Act:

• Section 232 to resolve disputes or settle complaints (such as to repair common property, or keep you informed of their actions, or for damages suffered as a result of the lack of repair/maintenance).
• Section 238 to remove a person from office or the strata committee.

Before making an application for orders, it would be prudent to seek legal advice to better understand your rights, to strategise and potentially be represented at the Tribunal.

Tim Sara
Strata Choice
E: tsara@stratachoice.com.au
P: 1300 322 213

This post appears in Strata News #499.

Question: Our strata executive committee has been taken over by a group of lot owners who make decisions in their favour and no longer enforce bylaws. They don’t communicate with the rest of the committee. What do we do?

We’ve lived in a strata scheme for 10yrs and had been on the strata Executive Committee with another two owners since moving in. We ran the place well and kept it neat and orderly. Three years ago, a disgruntled owner became an Executive Committee member, gathered some new owner residents and elected themselves to the chairman and secretary positions, changed the strata manager and have been ruling the roost since then.

The new strata manager openly shows favouritism to them. They have been voting the same people to office bearer positions for three consecutive years via secret ballot and they deal with all matters concerning them and their side of the block via direct phone calls to the strata manager. They should be making these decisions via email, cc’ing all committee members. Our objections to this process have been ignored.

Bylaws are no longer enforced:

• clothes are hung in balconies,
• resident cars (EC members and friends mostly) are parked in visitors parking
• funds are being misused for installation of cameras etc

Many of the other lot owners are investment property owners who aren’t interested in becoming involved. We feel like it is us two owners against four owners on the committee of seven. It’s a block of 14 units only.

We don’t see a way out. We have written to the council and environmental departments of NSW, but enforcing by-laws is the toughest part.

Answer: Stand united at the next AGM and gather a proxy each and vote the current committee down

You are an interested person under the strata legislation and are entitled to ensure the smooth operation of your Owners Corporation through NCAT: Strata Schemes Management Act 2015 – Sect 232

• 232 Orders to settle disputes or rectify complaints
1. Orders relating to complaints and disputes The Tribunal may, on application by an interested person, original owner or building manager, make an order to settle a complaint or dispute about any of the following:
   
   1. the operation, administration or management of a strata scheme under this Act,
   2. an agreement authorised or required to be entered into under this Act,
   3. an agreement appointing a strata managing agent or a building manager,
   4. an agreement between the owners corporation and an owner, mortgagee or covenant charge of a lot in a strata scheme that relates to the scheme or a matter arising under the scheme,
   5. an exercise of, or failure to exercise, a function conferred or imposed by or under this Act or the by-laws of a strata scheme,
   6. an exercise of, or failure to exercise, a function conferred or imposed on an owners corporation under any other Act.

You will need proper evidence to prove your case and will need to apply for mediation first.

Leanne Habib
Premium Strata
E: info@premiumstrata.com.au
P: 02 9281 6440

This post appears in Strata News #320.

Question: Our Secretary was subject to a Motion of a By-Law breach and worked with the Strata Manager to re-order Motions, placing his own Motion (where he was accused of a By-Law breach) at the very end of the agenda.

A group of owners recently called an EGM due to issues in our building and provided some Motions to the Strata Manager and requested that the order of the Motions stay in the order we had provided.

We also requested that the draft motions be sent to use before the Notice of EGM was sent out.

Both of these requests were simply ignored (and the order of Motions was changed and Notice of meeting sent out before we had the chance to review).

We then found out that the Secretary (who was appointed after we requested the EGM) and who was also subject to a Motion of a By-Law breach had worked with the Strata Manager and re-ordered our Motions, placing his own Motion (where he was accused of a By-Law breach) at the very end of the agenda. We felt this was a conflict of interest.

We requested when the EGM was about to start that we re-order some Motions and the Strata Manager (and meeting Chairman) became aggressive and simply refused.

The Motions regarding By-Law breaches were then dismissed by the Chairman and these Motions were not discussed at all.

I would love your view on this scenario.

Answer: Stand united at the next AGM and gather a proxy each and vote the current committee down

I have had this issue come up myself – I can’t find the advice I was given – but I would expect the following to be the case:

1. I believe it is the Secretary’s discretion as to the order of motions on the agenda
2. Requests for copies of an agenda – and that motions are kept in order, of course, can be made – but there is no requirement at law to meet that request
3. As to conflict of interest – without knowing what the topic is and how serious this allegation maybe – it is likely that morally you are correct – but legally there may be nothing to stop them from doing what they have done.
4. A Chairman can declare a motion out of order if it breaches some aspect of the legislation – so you should at the time request the basis (actual section) that this is the case for – otherwise the proposer can withdraw the motion – or the meeting agree (not the discretion of the chairman) to not put the motion. What should happen is that the party who requested the motion on the agenda should have forced the issue by asking the Chair to put the motion to the vote.
5. One final point – the Chairman should be impartial – or have the scheme’s interest at heart as a worst-case scenario. If the Chair is the strata manager – he should be ensuring everyone gets to have a say and a vote and that owners make an informed decision.

Schedule 2: 15 Chairperson may rule certain motions out of order

The chairperson at a meeting may rule a motion out of order if the chairperson considers that the motion if carried, would conflict with this Act or the by-laws of the strata scheme or would otherwise be unlawful or unenforceable.

I cannot see that the Chair or Secretary have breached S18 of Schedule 2 regarding declaring a pecuniary interest.

I am aware many managers do not follow this practice of being impartial and involve themselves in the politics of keeping the committee happy to ensure their contract is maintained. Over time this sort of behaviour only ensures that various people become unhappy (it’s not hard for all to see what is being done and why) and the vote would eventually go against the managers re-appointment – but how long that takes is up to the group who have been disenfranchised to enlist the backing of the others (ie it may happen to you next often works) and so push for a change. Either of the Chair of the committee if that who is at issue (or the Secretary) or the Strata Manager.

I would suggest that those who requisitioned the meeting stand united at the next AGM and gather a proxy each and vote the current committee down for starters but you will need to have others who are willing to stand and do the work. This will send a clear message to the manager and those elected off as to future behaviour. To be successful at this though you need to act by stealth as otherwise the committee and manager will collude to get votes to maintain the status quo.

Karina Heinz
W: https://www.prostrata.com.au/
E: manager@prostrata.com.au
P: 02 9389 9599

This post appears in Strata News #271.

Question: What can we do about one of our strata executive committee members who disregard the law and people’s safety, and has now driven almost all owners away?

How can a strata owner protect themselves against one of our Strata Executive Committee members, a keenly intentionally negligent secretary who has ruled a scheme for 25+ years with total disregard to strata legislation and other law issues such as public health and risk issues? They have driven almost all owners from the site so that only tenants remain to see, suffer and be at risk?

Answer: I understand the style of building / management structure and this can be problematic.

I have heard reports of strata like this for many years. I’m not sure of the detail on the negligence suggestion, however, I understand the style of building / management structure and this can be problematic.

The Strata Schemes Management Act 2015 doesn’t recognise a one person secretary as the only person to run a strata building except in the case where there is only one person on the Strata Committee who is Chairperson / Secretary and Treasurer. The reason behind this is that the Act recognises a strata committee as a whole, rather than a delegation of a Strata Committee (such as one or two members).

I would suggest that you do three things:

1. Nominate for the Strata Committee and also speaks to other owners to gain more interest from these owners to join the strata committee (to broaden the membership) and have them nominate at the next AGM. I would not suggest you be negative about the current structure. Focus the conversation towards increasing owner participation, which improves strata communities.
2. Making sure that everyone is clear on what role the Strata Manager performs under their agreement and what role the Strata Committee has in the management of the strata. Normally the routine day to day functions are run by the Strata Manager. Changes to contracts in place, trades used on site, insurance policies & operational procedures are usually voted upon by the Strata Committee as a whole. All owners via the AGM make decisions on each of the statutory motions including approving financials, levies and the strata committee election. A high level, 1-2 page document should be prepared and signed off by both the Strata Manager and the Strata Committee (at a Strata Committee meeting) outlining who does what.
3. Put in place a Strata Committee Charter to deal with the conduct of the Strata Committee level.

If these changes don’t change the strata culture, changing the strata manager may be the last resort. In similar situations to that which you describe, the Strata Manager is often entrenched with the primary owner so this may need to be resolved.

I hope this is helpful.

Rod Smith
The Strata Collective
E: rsmith@thestratacollective.com.au
P: 02 9879 3547

This article is for reference purposes only and is not intended to be a comprehensive review of the developments in the law and practice or to cover all aspects of the subject matter. It does not constitute legal or other advice and should not be relied upon this way. Readers should take legal or other advice before applying the information containing in this publication.

This post appears in Strata News #162.

Question: An old cooling tower in our building only services a proportion of the apartments. What are the strata executive committee powers? The committee is proposing to replace the tower with ducted air conditioning to the affected units at the cost of the Owners Corporation.

I live in a building completed in 1981 with 24 apartments.

At the time of the sale of the apartments, the builder put a cooling tower on the roof and connected 9 units to this cooling tower via air conditioners, which were also installed by the builder, in their own lot.

Although I believe the water pipes to the roof cooling tower for each lot is in place, the other lots have not connected to the cooling tower.

The secretary of the Strata Committee owns 3 lots which are connected. They have always told lot owners who have purchased over the years that the cooling tower would only accommodate 9 lots.

For many years now, I have argued the maintenance of the cooling tower should be borne by the 9 lots. How can this be common property if it is not available to all owners?

This February at the AGM I had a motion passed to get three reports to see if in fact the cooling tower was ever installed to accommodate 24 lots.

The strata executive committee has basically ignored this resolution, but the secretary did use 1 of the work orders to quote on a new system on the roof. On reading this report, it basically reads that the cooling tower is old and hasn’t been well maintained and that it would never accommodate 24 lots. He did say he could put a new unit in to accommodate 19 lots, assuming not everyone would want to use their air conditioner at the same time.

The Strata Committee meeting in May resolved to disconnect the cooling tower. This decision didn’t go to the Owners Corporation. Is this within the strata committee powers? The Strata Committee has raised a motion for an EGM to have the Owners Corporation pay for completely new ducted air conditioner units in each of their lots. In addition, the outside unit which will sit on each of their balconies is to be paid for and maintained by the Owners Corporation.

Of the 9 lots in question:

• 6 are owned by members of the Strata Committee, of which includes 1 which was bought with reverse cycle air conditioners and not connected to the cooling tower;
• 2 were disconnected from the system up to 18 years ago, but they are included in the motion;
• 1 lot has the “cupboard system” air conditioners in their lot but has never connected as she had been advised by a lot owner who had disconnected the system that the air conditioner “chewed up electricity, the heating unit was woeful” and it wasn’t worth using.

The Strata Committee are bringing this motion to NOT replace the cooling tower or equivalent BUT to have 9 lots fitted with the latest ducted air conditioning at a cost of approximately $13,000.00 per lot = approximately $117,000.00 in total to be paid for and maintained by the Owners Corporation.

In addition, there is no costing AT ALL in the motion.

What are the strata executive committee powers?

Answer: The strata committee seems to be abusing their powers and not acting in the best interests of the Owners Corporation.

So, your scheme is not a large one (under 100 lots).

Because the installations were there at the time of registration of the strata plan, it would appear that the cooling tower (but perhaps not the connections) are common property and the responsibility of the Owners Corporation.

Unfortunately, there is no legal requirement for common property to be “available to all owners”. For example, you might have a common property grease trap in the scheme, but it is for the exclusive use of the retail shop on the ground floor which no one else may access.

As you correctly point out, the decommissioning of the cooling tower could only properly be affected by the Owners Corporation.

Strata Executive Committee Powers

Your strata committee is exceeding its powers in that they are not exercising the Owners Corporation’s repair and maintenance function but rather “enhancing” lot and common property with a completely different product.

In our view, such installations should be governed by a by-law at the cost of the individual owners benefiting and they should bear the ongoing repair and maintenance thereof.

The strata committee seems to be abusing their powers and not acting in the best interests of the Owners Corporation (but rather themselves!). In relation to the costings, however, as you are not a large scheme there is no requirement to have a minimum number of quotes. Costing, on the other hand, must be disclosed.

You should be blocking the strata committee from considering the above motions and ensure you garner more than a third of the aggregate unit entitlements to ensure any decisions made in light of the signed objections have no legal force or effect. We can point you in the direction of strata lawyers to assist in this regard.

If they still persist, it seems you might have rights to have a compulsorily appointed manager take over the scheme (so that there is no strata committee or general meetings for one year).

Leanne Habib
Premium Strata
E: info@premiumstrata.com.au
P: 02 9281 6440

This article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.

This post appears in Strata News #200.

Question: What are my rights as a committee member who is abused in emails constantly with offending words and disrespectful terms about quotes and repairs for the block from another committee member?

I’d like to find out about rules around strata bullying in Australia. What are my rights as a committee member to be abused in emails constantly with offending words and disrespectful terms about quotes and repairs for the block from another committee member?

Answer: Harassment and intimidation is never ok.

Harassment and intimidation are never ok. This kind of behaviour is beyond the scope of the Strata Schemes Management Act 2015 and regulations.

I would suggest discussing the issue one on one with the person responsible after your next meeting. It may be useful to invite an independent person such as a fellow committee member to act as a go-between for the conversation.

Stay calm and don’t get aggressive, the key is to communicate how this issue makes you feel and how you want to move forward. I would open with a discussion stating that a strata committee is required to be run professionally and that you request that they refrain from using offensive and disrespectful terms in emails.

If this issue is unable to be resolved, I would recommend that your building adopts a strata committee charter at your next AGM.

Rod Smith
The Strata Collective
E: rsmith@thestratacollective.com.au
P: 02 9879 3547

This article is for reference purposes only and is not intended to be a comprehensive review of the developments in the law and practice or to cover all aspects of the subject matter. It does not constitute legal or other advice and should not be relied upon in this way. Readers should take legal or other advice before applying the information contained in this publication.

This post appears in Strata News #199.

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